How can an eco-label emerge from a corporate-NGO partnership? How can an environmental NGO both favor eco-label development and adoption by its corporate partner and eco-label diffusion to its partner's competitor? Treating the eco-label as a product innovation, we analyze a three-period game where a firm and an environmental NGO bargain first to develop an eco-label fulfilling their common goal, next the corporate partner adopts the label in order to vertically differentiated its product from the unlabeled one, and next its competitor can also adopt the label if the eco-labeled product is more cost effective than still supplying the differentiated, low quality product. We investigate the respective roles of market-driven incentives and corporate-NGO partnership on the adoption and the diffusion of the eco-label according to the nature of the competition.